Section 2 of POB Act, 1965 : Section 2: Definitions

Explanation using Example

Imagine a software company, "Tech Innovations Ltd.", that has its accounting year from April 1st to March 31st. At the end of the year, the company calculates its profits and finds that it has an available surplus after paying taxes and other statutory dues. According to the Payment of Bonus Act, 1965, "Tech Innovations Ltd." is required to share a portion of this surplus with its employees as a bonus.

The term "accounting year" as defined in the Act allows "Tech Innovations Ltd." to consider its financial year (April 1st to March 31st) for the purpose of bonus calculation. The company's employees, who are earning a monthly salary of less than twenty-one thousand rupees and are involved in various roles such as software development, management, and administration, are eligible for this bonus.

As "Tech Innovations Ltd." is a private sector company, it will allocate sixty percent of the available surplus to the bonus pool. This is in line with the definition of "allocable surplus" for companies other than banking companies that have complied with the dividend arrangement prescribed under the Income-tax Act.

Since the company is situated in the state of Karnataka, the "appropriate Government" for the application of the Act would be the Government of Karnataka, unless it's an establishment for which the Central Government is the appropriate Government under the Industrial Disputes Act.

The bonus is calculated and distributed to the employees before the deadline stipulated by the Act, thus complying with the legal requirements and boosting employee morale.